By The Hutchinson Tribune Editorial Board
Death and taxes, right?
Hutchinson City Manager Enrico Villegas proposed a two mill property tax increase and an additional 0.75% sales tax last week. He outlined reasons why raising taxes was necessary for a balanced budget in a study session immediately following Tuesday’s City Council meeting.
Some taxes are necessary. It costs money to have nice things. Someone has to maintain our streets and protect our community.
But we can tax ourselves to death, especially if we don’t spend wisely.
Spending money wisely involves talking to relevant stakeholders. Our community is stronger when our leaders work together. Yet as we reported yesterday, community stakeholders are not on the same page.
Parks and recreation funding should be requested in coordination with the Recreation Commission. The lack of coordination between the City’s proposal and the County’s recently approved study on a potential county-wide sales tax is even more concerning.
Reno County residents who live outside Hutchinson still shop there. A county-wide tax would benefit them significantly more, because their towns would receive part of the proceeds. If the City of Hutchinson goes for its own sales tax, county residents will end up paying the extra tax in Hutch, and their towns won’t get a dime.
The good news is that no decisions have been made on a future sales tax increase at either the City or the County. Time remains for both the public and local policymakers to gather more information.
Local businesses could be impacted significantly, particularly those that sell higher-priced items like auto dealers. Raising sales tax may hurt those businesses’ ability to attract customers from outside of Hutchinson, especially Wichita.
As a counterpoint, the City’s proposal would bring Hutchinson in line with McPherson or Salina. We do wonder if Hutchinson ought to match those communities’ sales tax rates so that it can invest in amenities that will attract people and businesses to move here.
It is true that increasing tourism increases sales tax receipts, but sales tax is regressive and has a larger impact on our lowest-income families. Do the hopes of collecting outside revenue outweigh the strain high sales taxes have on lower-income individuals? The combination of a new sales tax from both the City and County could send Hutchinson’s sales tax rate higher than many of our neighboring cities.
For those who support tourism, one risk of the City’s proposal is that it may impact voters’ appetite for the 0.25% sales tax voted on every five years. Most of that tax goes toward streets and the City general fund, but 33% is for the Cosmosphere and 5% for Strataca. Both are major tourism attractions.
At this point, our position is not to be firmly against the idea of any additional sales tax. Balancing our taxes with our community’s needs is vital. We are, however, saying that the community should be asking questions. We also suggest that since the county is already spending money on a study, we might as well wait and listen to the results before raising taxes.
Furthermore, the City should be more diligent with budgeting in the future. The past practice of leaving positions unfilled to balance the budget was not good stewardship. While the staff hirings may not be a direct cause of the need for increased revenues, short-sighted financial planning is never good for a community long-term.
In the meantime, here are a few more questions that we think need to be answered before voting on a tax increase:
- How much would the City have to raise the mill levy if they wanted to raise the same amount of revenue as the 0.75% sales tax?
- How much would be raised for the City under a county-wide sales tax initiative?
- How much of the City’s increased year-over-year expenses are coming from personnel?
- Which departments are adding the most personnel?
- What is the community getting from that increased personnel?
- What unbudgeted expenses occurred in the past two to three years, and how much are those contributing to the diminishing fund balances?
- Are sales and property tax receipts at, below, or above projections?
- What cuts are being proposed by City staff if the sales tax is not passed?
- What cuts could be made to balance the budget if the City Council refuses to raise the mill at all?
- How exactly would raising sales taxes affect the stormwater utility fee?
We will continue reporting as the City budget develops, and keep asking the questions the public deserves to know. If you share these questions, or you have questions of your own, we encourage you to contact the City Manager or your City Council representative. Let us know what you find out, and we will do the same.